Private Label Sourcing Negotiation: Premium PL from Dual Brander

S. Chan Choi ()
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S. Chan Choi: Rutgers Business School – Newark & New Brunswick

A chapter in Advances in National Brand and Private Label Marketing, 2018, pp 135-142 from Springer

Abstract: Abstract As private labels become proliferated, retailers are introducing premium PLs that replace marginal national brands. We examine a special case of tiered private label sourcing, in which a premium PL is supplied by the manufacturer of the corresponding NB (dual brander), and an economy PL is supplied by a dedicated PL supplier. In our model, the NB’s wholesale and retail prices are determined by the traditional bilateral Nash game. However, the premium PL’s wholesale price is determined through a profit-sharing negotiation between the channel members. From an equilibrium-negotiation solution, we derive profit implications of NB’s brand equity, the retailer’s reputation, and the intrinsic quality of the NB. Interestingly, even if the retails holds a strong negotiation power, we find it optimal for the retailer leave some chips on the table for the NB manufacturer.

Keywords: Premium private label; Equilibrium; Negotiation; Distribution channel (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-319-92084-9_15

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DOI: 10.1007/978-3-319-92084-9_15

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